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Accounting Policies of Garden Silk Mills Ltd. Company

Mar 31, 2015

1.01 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention in accordance with the Generally Accepted Accounting Principles including the Accounting Standards notified undet the provisions of The Companies Act, 2013. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles.

1.02 Fixed Assets:

Tangible Assets

Fixed Assets are recorded at cost of acquisition or construction, net of CENVAT / VAT and include amounts added / reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

Intangible Assets

Intangible assets ate stated at cost of acquisition less accumulated amortisation.

1.03 Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.04 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date in respect of Cash Generating Unit, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset''s selling price and value in use.

1.05 Investments

Investments classified as long term investments are stated at cost. Provision is made to recognize decline, other than temporary, in the value of investments. Investments classified as Current Investments are carried in Financial Statements at lower of Cost and fair value, computed categorywise.

1.06 Inventories

Inventories are valued in accordance with the requirements of revised Accounting Standard (AS2) on ''Valuation of Inventories'' issued by the Institute of Chartered Accountants of India (ICAI) using weighted average cost method. Any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis :

(i) Raw Materials, Stock in Process, Finished goods, Stores Spares & Chemicals are valued at cost or Net realisable value, whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

(iv) Property under Development is valued at cost.

1.07 ForeignCurrencyTransactions

Transactions denominated in foreign currencies are recorded at a rate prevelant on the date oftransaction.

At each Balance Sheet date, unrealized gains or losses on foreign currency transactions on revenue account as a result of increase or decrease in rupee liability as a result of exchange difference between the Balance Sheet date conversion rate and the transaction rate are recorded to the Profit & Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expense over the life of a contract, and any unrealized gains or losses on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date arising out of difference between the forward contract rate nd year-end rate are recognised in the Profit and Loss account.

1.08 Depreciation and Amortisation

Depreciation on the fixed assets is calculated on Straight Line Method, except on the Factory Buildings and Plant & Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated at Vareli which is on Written Down Value method. Depreciation on revalued Assets is charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets is provided overthe residual life ofthe assets.

Intangible asset is amortised over the useful life of the underlying asset.

Consequent to the applicability of the Companies Act, 2013 with effect from 1st April, 2014, during the year ended 31st March, 2015, the depreciation is provided as per the useful life specified in the Act or as re-assessed by the Company.

1.09 Revenue Recognisation

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax (VAT) on dispatch of goods to customers and gain/loss on corresponding hedge contracts. Sales also include sale of scrap, waste, rejects, empty containers etc.

Dividend income is recognized when right to receive payment is established.

Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

1.10 Expenses

All material known liabilities are provided for, on the basis of available information / estimates.

1.11 CENVAT:

(i) The purchase cost of raw materials and other expenses are considered net of cenvat available on inputs.

(ii) The cenvat benefits attributable to acquisition / construction of fixed assets are netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

1.12 Excise Duty and VAT

Excise Duty is accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses & uncleared goods and the same is treated as part ofthe cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered

Accountants of India.

Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock. Excise duty related to the difference between Closing Stock & Opening Stock is recognised separately in the Profit & Loss Account.

SalesTax / VAT payable/paid is charged to the Profit and Loss account.

1.13 Employees Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit is provided in accordance with the Accounting Standard (AS)15 "Employee Benefits" issued by the Institute of Chartered Accountants of India (ICAI).

(i) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering of service are classified as short term employee benefits. The benefits like salaries, wages, bonus, leave salary ex-gratia are recognised in the period in which employee renders the related services.

(ii) For Defined Contribution Plans (PF, FPF and ESI)

Contributions to Defined Contribution Plans are recognized as expenses in the Profit and Loss Account as they are incur.

(iii) For Defined Benefit Plans

As per requirement defined in Accounting Standard 15 - "Employee Benefits" issued by the Institute of Chartered Accountants of India, the entity relies on the Acturial valuation undertaken by a certified actury for the present value of obligation.

1.14 Research and Development

All revenue expenditure on research and development are charged to the Profit and Loss Account for the year in which they are incurred.

1.15 Inter-divisional Transfers

Internal transfers of goods between departments as captive consumption are shown as contra items in the Profit and Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.16 Borrowing Cost

Borrowing cost (including interest and exchange difference arising from foreign exchange borrowings) to the extent that they are regarded as the adjustments to interest costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortised and charged to the Profit and Loss Account, over the tenure of the loan.

1.17 Provision for Current and Deferred Tax

Provision for the current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.Deferred tax resulting from ''timing difference'' between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation and their required recognition.

1.18 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts.

Contingent Assets are neither recognized nor disclosed in the financial statement. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

1.19 EarningPerShare

"Basic Earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the year.

Diluted Earning per share is calculated by considering potential equity shares that have been converted, from the begining ofthe period"

2.1 As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, the management committee of Board of Directors of the Company at its meeting held on 23rd September, 2013 allotted 1487147 OCCPS of Rs. 10 each at a premium of Rs. 37.07 each in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

2.2 As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009 and consequent to the rights of conversion exercised by the OCCPS holders, the Board of Directors of the Company at its meeting held on 18th March, 2015, allotted 1949860 equity shares ofRs. 10/- each at a premium of Rs. 25.90 per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company, against 1487147, 0.001% OCCPS held by the promoters at the beginning of the year.


Mar 31, 2014

1.01 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles.

1.02 Fixed Assets:

Tangible Assets

Fixed Assets are recorded at cost of acguisition or construction, net of CENVAT / VAT and include amounts added / reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acguisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

Intangible Assets

Intangible assets are stated at cost of acguisition less accumulated amortisation.

1.03 Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.04 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date in respect of Cash Generating Unit, if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset''s selling price and value in use.

1.05 Investments

Investments classified as long-term investments are stated at cost. Provision is made to recognise decline, other than temporary, in the value of investments. Investments classified as Current Investments are carried in Financial Statements at lower of Cost and fair value, computed categorywise.

1.06 Inventories

Inventories are valued in accordance with the reguirements of revised Accounting Standard (AS2) on ''Valuation of Inventories''issued by the Institute of Chartered Accountants of India (ICAI) using weighted average cost method. Any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis:

(i) Raw Materials, Stock-in-Process, Finished goods, Stores Spares & Chemicals are valued at cost or Net realisable value, whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

(iv) Property under Development is valued at cost.

1.07 Foreign Currency Transactions

In Practice, transactions denominated in foreign currencies are recorded at a rate for a defined set of period that approximates the actual rate of the transactions.

At each Balance Sheet date, unrealised gains or losses on foreign currency transactions on revenue account as a result of increase or decrease in rupee liability as a result of exchange difference between the Balance Sheet date conversion rate and the transaction rate are recorded to the Profit and Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognised as income or expense over the life of a contract, and any unrealised gains or losses on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date are recognised in the Profit and Loss account.

1.08 Depreciation and Amortisation

Depreciation on the fixed assets is calculated on Straight Line Method at the rates prescribed in Schedule XIV to The Companies Act, 1956, except on the Factory Buildings and Plant & Machineries pertaining to DrawWinding & DrawTwisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated at Vareli which is on Written Down Value method. Depreciation on revalued Assets is charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acguisition of fixed assets is provided over the residual life of the assets. Intangible asset is amortised over the useful life of the underlying asset.

1.09 Revenue Recognisation

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax (VAT) on dispatch of goods to customers and gain/loss on corresponding hedge contracts. Sales also include sale of scrap, waste, rejects, empty containers etc. Dividend income is recognised when right to receive payment is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

1.10 Expenses

All material known liabilities are provided for, on the basis of available information /estimates.

1.11 CENVAT

(i) The purchase cost of raw materials and other expenses has been considered net ofcenvat available on inputs.

(ii) The cenvat benefits attributable to acguisition / construction of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

1.12 Excise Duty and VAT

Excise Duty is accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses and uncleared goods and the same is treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock and Opening Stock. Excise duty related to the difference between Closing Stock and Opening Stock is recognised separately in the Profit and Loss Account. Sales Tax /VAT payable/paid is charged to the Profit and Loss account.

1.13 Employees Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit is provided in accordance with the Accounting Standard (AS) 15 "Employee Benefits" issued by the Institute of Chartered Accountants of India (ICAI).

(i) Short-Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short-term employee benefits. The benefits like salaries, wages, bonus, leave salary ex-gratia are recognised in the period in which employee renders the related services.

(ii) For Defined Contribution Plans (PF FPF and ESI)

Contributions to Defined Contribution Plans are recognised as expenses in the Profit and Loss Account as they are incurred.

(iii) For Defined Benefit Plans

As per requirement defined in Accounting Standard 15 -"Employee Benefits" issued by the Institute of Chartered Accountants of India, the entity has relied on the Acturial valuation undertaken by the certified actury for the present value of obligation.

1.14 Research and Development

All revenue expenditure on research and development are charged to the Profit and Loss Account for the year in which they are incurred.

1.15 Inter-divisional Transfers

Internal transfers of goods between departments as captive consumption are shown as contra items in the Profit and Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.16 Borrowing Cost

Borrowing cost (including interest and exchange difference arising from foreign exchange borrowings) to the extent that they are regarded as the adjustments to interest costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortised and charged to the Profit and Loss Account, over the tenure of the loan.

1.17 Provision for Current and Deferred Tax

Provision for the current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961. Deferred tax resulting from''timing difference''between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.

2.1 As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, the management committee of Board of Directors of the Company at its meeting held on 23rd September, 2013 allotted 1487147 OCCPS of Rs. 10/- each at a premium of Til.07 each in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

2.2 The OCCPS shall be converted into Eguity Shares, partially or fully, in one or more tranches, at the sole option of the OCCPS holder but not in any case later than 18 (eighteen) months from the date of allotment.

2.3 As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, conseguentto the rights of conversion exercised by the warrant holders, the Board of Directors of the Company at its meeting held on 19th March, 2014 allotted 1842105 eguity shares of Rs.10/- each at a premium of Rs.28/- per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

2.4 Rights, Preferences and Restrictions attached to Shares

Equity Shares:

The Company has two class of shares referred to as Equity Shares and Optionally Convertible Cumulative Preference Shares (OCCPS), having a par value of Rs.10/- each. Each equity shareholders is entitled to one vote per share held. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting. In the event of liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

OCCPS holder shall have option to apply for and obtain allotment, from time to time, not later than 18 (eighteen) months from the date of allotment of OCCPS, of such number of fully paid-up equity shares of the face value of Rs.10/- each ("Equity Shares") against conversion of the OCCPS in such manner and on such price, terms and conditions as determined by the Board, such that the total issue size of the preferential allotment does not exceed an aggregate value ofRs. 7.00 Crores (including, premium if any, on such Equity Shares), in accordance with the provisions of Chapter VII of the SEBI (ICDR) Regulations or other provisions of the law as may be prevailing at that time.

3.1 During the previous year, the Company had issued and allotted convertible warrants aggregating to Rs. 7.00 Crores in accordance with the SEBI (ICDR) Regulations, 2009, as amended, in favour of Promoters on preferential basis as part of the arrangement with the lenders to realign debts repayment schedules.

As per the terms of issue and in accordance with the provisions of SEBI (ICDR) Regulation, 2009, consequent to the rights of conversion exercised by the warrant holders, the Board of Directors of the Company at its meeting held on 19th March, 2014 allotted 1842105 equity shares ofRs. 10/- each at a premium ofRs. 28/- per share in favour of Praful Amichand Shah, Partner of M/s. Isha Enterprises, the promoter and/or promoter group of the Company.

4.1 During the previous year, the Company had received an Application Money of Rs. 7.00 Crores by way of Promoters'' contribution for issue of 0.001 % Optionally Convertible Cumulative Preference Shares (OCCPS), as part of the arrangement with the lenders to realign debts repayment schedules.

5.1 Note on Secured Long-Term Borrowings:

a) Term Loans from Banks and Financial Institutions are secured by first mortgage on par/passu basis on all immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favour of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks:

i) Loans from Bank of India to the extent of Rs. 250.00 Lacs (Previous year Rs. 245.43 Lacs) are secured by hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa.

ii) Loans from Bank of India to the extent of Rs. 1191.11 Lacs (Previous year Rs. 1185.74 Lacs) are secured by hypothecation of specific Building and machinery of Texturising plant and DrawTwisting plant at Jolwa.

iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd. aggregating to Rs. 116.03 Lacs (Previous year Rs. 139.88 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan of Rs. 643.21 Lacs (PreviousyearRs. 713.92 Lacs) from ICICI Bankis secured by hypothecation of residential flat at Mumbai.

v) Loans from Corporation Bank to the extent ofRs. 3640.00 Lacs (Previous Year Rs. 3640.00 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerisation Project at Jolwa.

vi) Loan from Union Bank of India to the extent ofRs. 5248.90 Lacs (Previous Year Rs. 5248.90 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

c) During the year 2011-12, the Company had entered into an arrangement with lenders to realign its principal debt repayment schedule and has secured the consent of lenders to spread its term loan repayment over a period of 8 years, after a moratorium of 2 years.

d) As on the Balance Sheet date, the payment of interest for the month of February 14 and March 14, aggregating to Rs. 1371.77 Lacs to various lender banks/institutions were unpaid.

6.1 The Company has unabsorbed depreciation and carried forward losses under Tax laws. In absence of virtual certanty of sufficient future taxable income,net deferred tax assets has not been recognised by way of prudence in accordance with Accounting Standard (AS) 22"Acounting forTaxeson Income" issued by the Institute of Chartered Accountants of India.

7.1 Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured with hypothecation by way of first pari passu charge on all company''s current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company Rate of Interest on Cash Credit facilities ranged between 11.50% to 11.80%.

7.2 Buyers''Credit is secured by Letter of Comfort (LOC) / Undertaking (LOU) which is a part of Working Capital facilities issued by the banks. Rate of Interest on Buyers''Credit facility is ranging between 100-120 bps above the Libor at the relevant time.

8.1 The Company had recognised liability based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on 31st March, 2013 of Rs. 1752.10 Lacs as per the estimated pattern of dispatches. On the analogy, provision for such liability works out to beRs. 916.91 Lacs as on 31st March, 2014. Actual outflow is expected in next financial year.


Mar 31, 2013

1.01 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of The Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles.

1.02 Fixed Assets:

Tangible Assets

Fixed Assets are recorded at cost of acguisition or construction, net of CENVAT / VAT and include amounts added / reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acguisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

Intangible Assets

ntangible assets ate stated at cost of acguisition less accumulated amortisation.

1.03 Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.04 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date in respect of Cash Generating Unit, if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount exceeds its recoverable a mount. The recoverable amount is the greater of the asset''s selling price and value in use.

1.05 Investments

nvestments classified as long-term investments are stated at cost. Provision is made to recognise decline, other than temporary, in the value of investments. Investments classified as Current Investments are carried in Financial Statements at lower of Cost and fair value, computed categorywise.

1.06 Inventories

nventories are valued in accordance with the reguirements of revised Accounting Standard (AS2) on ''Valuation of nventories''issued by the Institute of Chartered Accountants of India (ICAI) using weighted average cost method. Any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis:

(i) Raw Materials, Stock-in-Process, Finished goods, Stores Spares and Chemicals are valued at cost or Net realisable value, whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

(iv) Property under Development is valued at cost.

1.07 Foreign Currency Transactions

In Practice, transactions denominated in foreign currencies are recorded at a rate for a defined set of period that approximates the actual rate of the transactions.

At each Balance Sheet date, unrealised gains or losses on foreign currency transactions on revenue account as a result of increase or decrease in rupee liability as a result of exchange difference between the Balance Sheet date conversion rate and the transaction rate are recorded to the Profit and Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognised as income or expense over the life of a contract, and any unrealised gains or losses on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date are recognised in the Profit and Loss account.

1.08 Depreciation and Amortisation

Depreciation on the fixed assets is calculated on Straight Line Method at the rates prescribed in Schedule XIV to The Companies Act 1956, except on the Factory Buildings and Plant and Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated atVareli which is on Written Down Value method. Depreciation on revalued Assets is charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acguisition of fixed assets is provided over the residual life of the assets. Intangible asset is amortised over the useful life of the underlying asset.

1.09 Revenue Recognisation

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax (VAT) on dispatch of goods to customers and gain/loss on corresponding hedge contracts. Sales also include sale of scrap, waste, rejects, empty containers etc. Dividend income is recognised when right to receive payment is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

1.10 Expenses

All material known liabilities are provided for, on the basis of available information /estimates.

1.11 CENVAT:

(i) The purchase cost of raw materials and other expenses has been considered net ofcenvat available on inputs.

(ii) The cenvat benefits attributable to acguisition/construction of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

1.12 Excise Duty and VAT

Excise Duty is accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses and uncleared goods and the same is treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock and Opening Stock. Excise duty related to the difference between Closing Stock and Opening Stock is recognised separately in the Profit and Loss Account. Sales Tax /VAT payable/paid is charged to the Profit and Loss account.

1.13 Employees Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit is provided in accordance with the Accounting Standard (AS) 15 "Employee Benefits" issued by the Institute of Chartered Accountants of India (ICAI).

1.14 Research and Development

All revenue expenditure on research and development are charged to the Profit and Loss Account for the year in which they are incurred.

1.15 Inter-divisional Transfers

nternal transfers of goods between departments as captive consumption are shown as contra items in the Profit and Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.16 Borrowing Cost

Borrowing cost (including interest and exchange difference arising from foreign exchange borrowings) to the extent that they are regarded as the adjustments to interest costs directly attributable to the acguisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortised and charged to the Profit and Loss Account, over the tenure of the loan.

1.17 Provision for Current and Deferred Tax

Provision for the current tax is made after taking into consideration benefits admissible under the provisions of the ncome-tax Act, 1961. Deferred tax resulting from''timing difference''between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.


Mar 31, 2012

1.1 Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of The Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the generally accepted accounting principles.

1.2 Fixed Assets:

Tangible Assets

Fixed Assets are recorded at cost of acquisition or construction, net of CENVAT / VAT and include amounts added / reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

Intangible Assets

Intangible assets ate stated at cost of acquisition less accumulated amortisation.

1.3 Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.4 Impairment of Assets

The carrying amount of assets are reviewed at each balance sheet date in respect of Cash Generating Unit if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset's selling price and value in use.

1.5 Investments

Investments classified as long term investments, are stated at cost . Provision is made to recognize decline, other than temporary, in the value of investments. Investments classified as Current Investments are carried in Financial Statements at lower of Cost and fair value, computed categorywise.

1.6 Inventories

Inventories are valued in accordance with the requirements of revised Accounting Standard (AS2) on 'Valuation of Inventories' issued by the Institute of Chartered Accountants of India (ICAI) using weighted average cost method. Any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis :

(i) Raw Materials, Stock in Process, Finished goods, Stores Spares & Chemicals are valued at cost or Net realisable value whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

(iv) Property under Development is valued at cost.

1.7 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the rates of exchange in force at the time transactions are affected.

At each Balance sheet date, unrealized gains or losses on foreign currency transactions on account of increase or to decrease in rupee liability as a result of exchange difference between the Balance sheet date rate and the transaction rate are recorded to the Profit & Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expense over the life of a contract, and any unrealized gains or losses, on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date, are recognised in the Profit and Loss account.

1.8 Depreciation and Amortisation

Depreciation on fixed assets has been calculated on Straight Line Method at the rates prescribed in Schedule XIV to The Companies Act 1956, except on the Factory Buildings and Plant & Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated at Vareli which is on Written down value method. Depreciation on revalued Assets has been charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets has been provided over the residual life of the assets. Intangible asset is amortised over the useful life of the underlying asset.

1.9 Revenue Recognisation

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax (VAT) on dispatch of goods to customers and gain/loss on corresponding hedge contracts. Sales also include sale of scrap, waste, rejects, empty containers etc. Dividend income is recognized when right to receive payment is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

1.10 Expenses

All material known liabilities are provided for, on the basis of available information / estimates.

1.11 CENVAT:

(i) The purchase cost of raw materials and other expenses has been considered net of cenvat available on inputs.

(ii) The cenvat benefits attributable to acquisition / construction of fixed assets is netted off against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

1.12 Excise Duty and VAT

Excise Duty has been accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses & uncleared goods and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock. Excise duty related to the difference between Closing Stock & Opening Stock is recognised separately in the Profit & Loss Account. Sales Tax / VAT paid is charged to the Profit and Loss account.

1.13 Retirement Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit has been provided in accordance with the Accounting Standard (AS)15 "Employee Benefits" issued by the Institute of Chartered Accountants of India (ICAI).

1.14 Research and Development

All revenue expenditure on research and development are charged to Profit and Loss Account for the year in which they are incurred.

1.15 Inter-divisional Transfers

Internal transfers of goods between departments as captive consumption is shown as contra items in the Profit and Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.16 Borrowing Cost

Borrowing cost (including interest and exchange difference arising from foreign exchange borrowings) to the extent that they are regarded as the adjustments to interest costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortised and charged to Profit and Loss Account, over the tenure of the loan.

1.17 Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income- tax Act, 1961. Deferred tax resulting from 'timing difference' between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.


Mar 31, 2011

(a) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and provisions of The Companies Act, 1956, read with the Companies (Accounting Standards) Rules, 2006. The Company follows the mercantile system of accounting and therefore recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise, are consistent with the generally accepted accounting principles.

(b) Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax ( VAT ) etc. on dispatch of goods to customers. Sales also include sale of scrape, waste, rejects, empty containers etc. Dividend income is recognized when right to receive payment is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

(c) Fixed Assets

Fixed Assets are stated at cost of acquisition or construction, net of CENVAT / VAT and include amounts added/reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

(d) Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

(e) Impairment of Assets

The carrying amount of the fixed assets is reviewed at each Balance Sheet date for impairment whenever events or changes in circumstances indicates that the carrying amount of an asset may not be recoverable. An impairment loss is recognized in the financial statement when the carrying amount of fixed assets exceeds the assessed estimated recoverable amount and charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The recoverable amount is the greater of assets' net selling price of its value in use. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(f) Investments

Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. Current investments are carried at lower of cost and fair value, computed category wise.

(g) Inventories

Inventories are valued in accordance with the requirements of revised Accounting Standard (AS2), using weighted average cost method. Any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods. Inventory valuation is determined on the following basis:

(i) Raw materials, Stock in process, Finished Goods, Stores Spare parts & Chemicals, Packing Materials, Stock-in-trade (Art and Artifacts) are valued at cost or net realisable value whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

(iv) Property under Development is valued at revalued cost of land and construction thereon at cost.

(h) Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are recorded at the rates of exchange in force at the time transactions are affected.

(ii) At each Balance sheet date, unrealized gains or losses on foreign currency transactions on account of increase or decrease in rupee liability as a result of exchange difference between the Balance sheet date rate and the transaction rate to items of assets and liabilities are recorded to the Profit and Loss account, and accordingly, assets or liabilities are adjusted.

(iii) The difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expenses over the life of a contract, and any unrealized gains or losses, on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date are recorded to the Profit and Loss account.

(i) Depreciation

Depreciation on fixed assets has been calculated on Straight Line Method at the rates prescribed in Schedule XIV to The Companies Act, 1956 except on the Factory Buildings and Plant & Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping and Gas Based Power Project situated at Vareli which is on written down value method. The depreciation on revalued assets, has been charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. The depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets has been provided over the residual life of the assets.

(j) Expenses

All material known liabilities are provided for on the basis of available information / estimates.

(k) Cenvat

(i) The purchase cost of raw materials and other expenses has been considered net of cenvat available on inputs.

(ii) The cenvat benefits attributable to acquisition / construction of fixed assets is netted of against the cost of fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

(l) Excise Duty and Sales Tax/Value Added Tax

Excise Duty is accounted on the basis of both, payments made goods cleared as also provision made for goods lying in bonded warehouses & uncleared goods and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock of finished goods which is recognised separately in the Profit and Loss Account. Sales tax / Value added tax paid is charged to Profit and Loss Account.

(m) Retirement Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit has been made in accordance with the accounting standard AS-15 "Employee Benefits".

(n) Research and Development

All revenue expenditure on research and development are charged to Profit and Loss Account for the year in which they are incurred.

(o) Inter-divisional Transfers

Inter-divisional transfer of goods between departments as captive consumption is treated as contra items in the Profit and Loss Account to refect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

(p) Miscellaneous Expenditure

Miscellaneous Expenditure are Front end fees on loans of earlier years which are being written of equally over the duration of the respective loans.

(q) Borrowing Costs

Borrowing cost (Including interest and exchange differences arising from foreign exchange borrowings to the extent that they are regarded as the adjustments to interest costs) that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account.

(r) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income-tax Act, 1961. Deferred tax resulting from 'timing difference' between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.


Mar 31, 2010

(a) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and provisions of The Companies Act, 1956, read with the Companies (Accounting Standards) Rules, 2006. The Company follows the mercantile system of accounting and therefore recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise, are consistent with the generally accepted accounting principles.

(b) Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales includes sale of goods, services, service tax, excise duty and sales during trial run period, adjusted for returns, discount, rate difference and Value Added Tax (VAT) etc. on dispatch of goods to customers. Sales also include sales of scrape, waste, rejects, empty containers etc. Dividend income is recognized when right to receive payment is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

(c) Fixed Assets

Fixed Assets are stated at cost of acquisition or construction, net of CENVAT / VAT and include amounts added / reduced on revaluation, less accumulated depreciation. These assets have been stated at historical cost, except for the Fixed Assets which have been revalued. Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred, (including expenditure on test runs and experimental production) at project sites for the period prior to commencement of commercial production are capitalised as part of asset cost.

(d) Capital Work-in-Progress

Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

(e) Impairment of Assets

The carrying amount of the fixed assets is reviewed at each Balance Sheet date for impairment whenever events or changes in circumstances indicates that the carrying amount of an asset may not be recoverable. An impairment loss is recognized in the financial statement when the carrying amount of fixed assets exceeds the assessed estimated recoverable amount and charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The recoverable amount is the greater of assetsnet selling price of its value in use. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(f) Investments

Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. Current investments are carried at lower of cost and quoted/fair value, computed category wise.

(g) Inventories

Inventories are valued in accordance with the requirements of revised Accounting Standard-2 (AS2) issued by the Institute of Chartered Accountants of India on valuation of inventories using weighted average cost method as under:

(i) Raw Materials Stores, Spare parts, Chemicals and Stock in Process are valued at cost.

(ii) Finished goods and Stock-in-trade (Art & Artifacts) are valued at cost or Net realisable value whichever is lower.

(iii) Waste is valued at net realisable value.

(iv) Property under development is valued at book value.

Inventories are specifically identified, wherever possible in respect of traded goods.

(h) Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are recorded at the rates of exchange in force at the time transactions are affected.

(ii) At each Balance sheet date, unrealized gains or losses on foreign currency transactions on account of increase or decrease in rupee liability as a result of exchange difference between the Balance sheet date rate and the transaction rate to items of assets and liabilities are recorded to the Profit and Loss account, and accordingly, assets or liabilities are adjusted.

(iii) The difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expenses over the life of a contract, and any unrealized gains or losses, on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date are recorded to the Profit and Loss account.

(i) Depreciation

Depreciation on fixed assets has been calculated on Straight Line Method at the rates prescribed in Schedule XIV to The Companies Act, 1956 except on the Factory Buildings and Plant & Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping and Gas Based Power Project situated at Vareli which is on written down value method. The depreciation on revalued assets, has been charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. The depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets has been provided over the residual life of the assets.

(j) Expenses

All material known liabilities are provided for on the basis of available information / estimates. Ik) Cenvat

(i) The purchase cost of raw materials and other expenses has been considered net of cenvat available on

inputs. (ii) The cenvat benefits attributable to acquisition / construction of fixed assets is netted off against the cost of

fixed assets in accordance with the guidance note issued by The Institute of Chartered Accountants of India.

(I) Excise Duty and Sales Tax /Value Added Tax.

Excise Duty is accounted on the basis of both, payments made goods cleared as also provision made for goods lying in bonded warehouses & uncleared goods and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty issued by The Institute of Chartered Accountants of India. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock of finished goods which is recognised separately in the Profit and Loss Account. Sales tax /Value added tax paid is charged to Profit and Loss Account.

(m) Retirement Benefits

Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit has been made in accordance with the accounting standard AS-15 "Employee Benefits".

(n) Research and Development

All revenue expenditure on research and development are charged to Profit and Loss Account for the year in which they are incurred.

(o) Inter-divisional Transfers

Inter-divisional transfers of goods between departments as captive consumption is shown as contra items in the Profit and Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

(p) Miscellaneous Expenditure

Miscellaneous Expenditure are Front end fees on loans of earlier years which are being written off equally over the duration of the respective loans.

(q) Borrowing Costs

Borrowing cost (Including interest and exchange differences arising from foreign exchange borrowings to the extent that they are regarded as the adjustments to interest costs) that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period oftimetoget ready for its intended use. All other borrowing costs are charged to Profit and Loss account.

(r) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income-tax Act, 1961. Deferred tax resulting from timing difference between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realisation.

 
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